Circuit City 2008 Annual Report Download - page 14

Table of Contents
•
Changes in financial accounting standards may affect our results of operations.
A change in accounting standards or practices can have a significant effect on our reported results of operations. New accounting
pronouncements and interpretations of existing accounting rules and practices have occurred and may occur in the future. Changes to
existing rules may adversely affect our reported financial results.
Risks Related to Our Company
•
Our reliance on information and communications technology requires significant expenditures and entails risk.
We rely on a variety of information and telecommunications systems in our operations. Our success is dependent in large part on the
accuracy and proper use of our information systems, including our telecommunications systems. To manage our growth, we
continually evaluate the adequacy of our existing systems and procedures. We anticipate that we will regularly need to make capital
expenditures to upgrade and modify our management information systems, including software and hardware, as we grow and the
needs of our business change. In particular, our financial and retail point of sale systems will be replaced during the coming years.
The occurrence of a significant system failure, electrical or telecommunications outages or our failure to expand or successfully
implement new systems could have a material adverse effect on our results of operations.
Our information systems networks, including our web sites, and applications could be adversely affected by viruses or worms and
may be vulnerable to malicious acts such as hacking. Although we take preventive measures, these procedures may not be sufficient
to avoid harm to our operations, which could have an adverse effect on our results of operations.
•
We are dependent on third-party suppliers.
We purchase substantially all of our computer products from major distributors such as Ingram Micro Inc. and Tech Data and
directly from large manufacturers such as Hewlett Packard and Acer, who may deliver those products directly to our customers.
These relationships enable us to make available to our customers a wide selection of products without having to maintain large
amounts of inventory. The termination or interruption of our relationships with any of these suppliers could materially adversely
affect our business.
Our PC products contain electronic components, subassemblies and software that in some cases are supplied through sole or limited
source third-party suppliers, some of which are located outside of the U.S. Although we do not anticipate any problems procuring
supplies in the near-term, there is no assurance that parts and supplies will be available in a timely manner and at reasonable prices.
Any loss of, or interruption of, supply from key suppliers may require us to find new suppliers. This could result in production or
development delays while new suppliers are located, which could substantially impair operating results. If the availability of these or
other components used in the manufacture of our products was to decrease, or if the prices for these components were to increase
significantly, operating costs and expenses could be adversely affected.
We purchase a number of our products from vendors outside of the United States. Difficulties encountered by one or several of these
suppliers could halt or disrupt production and delay completion or cause the cancellation of our orders. Delays or interruptions in the
transportation network could result in loss or delay of timely receipt of product required to fulfill customer orders.
Many product suppliers provide us with co-op advertising support in exchange for featuring
12